Blowing smoke
AMERICA is committed to a path to slow, stop and then, as the science justifies, reverse greenhouse gas emissions growth. George Bush was due to utter those grand words on February 14th, just as this newspaper went to press. They sum up his long-awaited policy on global warming. The strategy commits America to an aggressive strategy to cut greenhouse gas intensity by 18% over the next ten years. It talks of a robust registry of emissions that would give businesses incentives to invest in new, cleaner technology and voluntarily reduce greenhouse gas emissions. In 2012, progress will be reviewed and additional action taken if necessary. At first blush, these elements seem to add up to a serious policy on climate change. But why should Mr Bush offer a plan at all? Many of his natural supporters are convinced either that global warming is scientific rubbish, or that any effort to mitigate it would prove an economic nightmare. And the president's clumsy handling of climate policy has got him into trouble for most of the past year. Last March, he announced that he had changed his mind about a campaign pledge to regulate carbon dioxide, the principal greenhouse gas (GHG) thought to be behind global warming. Soon after, he confirmed that he thought the Kyoto Protocol fatally flawed. Political leaders in Europe and greens everywherealready furious with America for being the largest contributor to man-made GHG emissionsimmediately branded him the Toxic Texan. It is amazing, then, that Mr Bush has dared once more to stick his neck out on the subject. Perhaps his objection to Kyoto really was high-minded, as he claimed. Perhaps, too, he really meant what he said when he insisted last June that climate change was a serious problem that deserved a serious policy response. Yet as this week's Economics Focus explains (see article), any credible policy on tackling climate change must include either a carbon tax or a mandatory target for limiting carbon emissions. The former could be implemented all through the economy with little red tape. The latter would be more unwieldy, but would probably include a mechanism for trading carbon permits among companies (a cap-and-trade scheme) that would greatly reduce the cost of cutting emissions. Mr Bush's proposal contains neither of these. Of course, a tax would be unpopular. However, a flexible cap-and-trade proposal might not be. The environmental chapter of the new report prepared by Mr Bush's own Council of Economic Advisers is full of praise for market-based policies. Various proposals of this sort are already floating around Congress, and a number of big corporations, including coal-fired utilities, have publicly asked the government for such an approach. So what exactly does Mr Bush's policy contain of substance? The 18% target for reductions over the next decade sounds impressive. But Mr Bush is not talking about reducing emissions of GHGs, only emissions intensitythat is, the level of emissions per unit of economic output. That is utterly inadequate as a target, as the 1990s showed (see chart), since it is a virtual guarantee of much higher absolute levels of GHG emissions in a decade. The notion of improving America's registry for GHG emissions is certainly a good one. Done properly, it would help firms take stock of their actual emissions, and could set the foundation for a sensible scheme for trading emissions credits. What is more, existing registry schemes like America's Toxics Release Inventory, which forces companies to disclose details of their use of chemicals, achieve environmental goals not through red tape but through the power of sunshine: the fear of appearing at the top of the list of polluters encourages firms to clean up their act. But for any reporting system to be meaningful, it must be mandatoryand Mr Bush is too timid to suggest that. The president raises the possibility of an effective trading scheme only in the distant future, long after he has left office. If his voluntary measures do not help the economy to meet his voluntary emissions target (however that is measured), he promises much tougher action in 2012: possibly a market-based programme, extra incentives and morewait for itvoluntary measures. What a sham. As Eileen Claussen of the Pew Centre says, This is just an effort to cloak business as usual' in some finery. Emissions will continue to grow. Mr Bush was right to reject the prohibitively expensive Kyoto pact, but he promised a substantial and cost-effective domestic policy to take its place. This is not it. As the president himself might say, his proposal is all hat and no cattle.